Omaha Indem. Co. v. Pall, Inc.

• Decision Date: 16 July 1991
• Docket Number: Nos. 58508,58577 and 58628,s. 58508
• Citation: 817 S.W.2d 491
• Parties: OMAHA INDEMNITY COMPANY, Plaintiff/Respondent, v. PALL, INC., et al., Defendants/Appellants.
• Court: Missouri Court of Appeals

Page 491

817 S.W.2d 491

OMAHA INDEMNITY COMPANY, Plaintiff/Respondent, v. PALL, INC., et al., Defendants/Appellants.

Nos. 58508, 58577 and 58628.

Missouri Court of Appeals,

Eastern District,

Southern Division.

July 16, 1991.

Motion for Rehearing and/or Transfer to

Supreme Court Denied Sept. 23, 1991.

Application to Transfer Denied Nov. 19, 1991.

John L. Oliver, Cape Girardeau, for plaintiff/respondent.

Stephen C. Wilson, Jackson, Albert C. Lowes, Paul V. Gilbert, John P. Bradshaw, Cape Girardeau, Jim S. Green, Sikeston, Kenneth W. Shrum, Marble Hill, Brent Winfield Baldwin, Baldwin, Rutledge & Hess, St. Louis, James Spain, Poplar Bluff, William Loren Syler, Jr., P. Patrick Davis, Cape Girardeau, for defendants/appellants.

REINHARD, Presiding Judge.

Defendant Farm Bureau Town and Country appeals the summary judgment finding it liable for coverage arising out of a traffic accident. Cross-appeals from the same summary judgment have been filed by plaintiffs Omaha Indemnity Company and Cameron Mutual Insurance Company challenging the finding that they are secondarily liable under uninsured motorist provisions. A cross-appeal has also been filed by defendant Progressive Casualty Insurance Company. Defendants Mark Howard, Susan Howard and Sherman Starkey did not appeal the summary judgment. We affirm the judgment of the trial court.

The Howards own a farm which they operate under the name Howard Farms. They also do commercial hauling under a Public Service Commission dump truck permit. One of the requirements of issuance of that permit was that Howard obtain insurance specifically designed to cover commercial trucking operations. Defendant Progressive Casualty issued a policy covering a 1973 Ford dump truck and sent this policy and an amendment to it called "Uniform Motor Carrier Bodily Injury and Property Damage Liability Insurance Endorsement" to the Public Service Commission. This endorsement and a "certificate of insurance" were P.S.C. requirements for all such permits.

In addition to the truck listed on the Progressive insurance policy, Mark Howard also owned a 1976 Ford dump truck that had been a gift from his father, Vincent Howard, who had used it on his farm before he retired. Prior to the gift, this truck was insured with the Defendant, Farm Bureau Town and Country Insurance Company of Missouri. When Vincent Howard transferred the title of the dump truck to his son he also transferred coverage into his son's name. As Mark Howard already had one dump truck that was used on the farm, he thus had two dump trucks named in Farm Bureau policies and one dump truck named in his Progressive policy. In his deposition he testified that when he bought rock for his own use he hauled it with one of these trucks. The policy written by Farm Bureau included an exclusion called Endorsement No. 76 "Farm Use" which stated:

In consideration of the premium paid for the policy to which this endorsement is attached, it is understood and agreed that the insured vehicle is to be used exclusively for the farm use of the named insured only. Any use of the vehicle for hire or in connection with any custom farming done by the insured or others, except in the occasional hauling of farm products for neighbors, voids the policy.

Early in 1986 Mark Howard began hauling rock for a highway project nearby. He worked both for the general contractor, Bloomsdale Excavating Company, and for its subcontractor, Fred Weber, Inc. His oral contract required him to provide rock as needed usually with one or two days notice. He used his own commercial dump truck and, on occasion, subcontracted with other truckers who would haul under Howard's PSC permit.

Mark Howard employed Sherman Starkey by the hour as a mechanic. Shortly before the accident, which occurred on September 23, 1986, Starkey had done extensive mechanical repairs on the 1976 truck that was insured by Farm Bureau. On the day of the accident Starkey, at Howard's direction, took the truck out for a "test drive". Mark Howard testified in his deposition that in order to fully assess the success of the repair the truck needed to be driven loaded. He therefore ordered Starkey to go pick up a load of rock for Weber and deliver it to the job site. On his way to get the rock Starkey made a left turn onto I-55 and was struck by a 1983 Oldsmobile driven by Abernathy. Schreiner and Humes were passengers. Shreiner and Abernathy were seriously injured. All three were employees of the City of Jackson, Missouri and were traveling to Columbia on city business. The Oldsmobile was titled in a corporation owned by Abernathy, Pall, Inc. Abernathy's insurance carrier is the plaintiff, Omaha Indemnity Company. Schreiner's carrier is Cameron Insurance. Starkey was uninsured at the time of the accident.

Howard reported the accident to Farm Bureau which began an investigation. He did not notify Progressive. Farm Bureau decided that the vehicle was not being used as a farm vehicle when the accident occurred. On December 10, 1986, the Company notified Howard by certified letter that the policy was being declared void as of September 23, 1986.

Abernathy and Schreiner made claims, under their uninsured motorist provisions, to their insurance carriers. The clause defining uninsured motorist in Omaha Indemnity's contract included vehicles:

"D: Insured by a bodily injury liability bond or policy at the time of the occurrence, but the insurer denies coverage or is or becomes insolvent."

Cameron, Schreiner's carrier, included a similar definition in his policy. Abernathy and Schreiner claimed that since Farm Bureau had denied responsibility their injuries should be covered under the uninsured vehicle provisions of their policies.

Omaha filed a Petition for Declaratory Judgment against Pall Inc., Abernathy, Schreiner, Humes, City of Jackson, the Howards, Starkey, Vincent Howard, Bloomsdale, Fred Weber Inc., Farm Bureau, Shelter Insurance Company, ¹ Progressive and Cameron Insurance Company claiming that the vehicle driven by Starkey was not an uninsured vehicle and asking the court to determine which insurance carrier was responsible for the claim.

A substantial record was created, including depositions of Howard, Starkey and three employees of Farm Bureau. Motions for Summary Judgment were filed by Omaha, Cameron, Bloomsdale, and Farm Bureau. After the issues were argued twice to the Court and an evidentiary hearing was held, the Court issued its Order and Judgment on the Motions for Summary Judgment.

The trial court found that: A) At the time of the accident the 1976 Ford dump truck was being used simultaneously for a commercial and a farm use. Because the farm use policy made no mention of simultaneous use and did not define "farm use" the court held that a "latent ambiguity" existed. It resolved this ambiguity against Farm Bureau. B) The policy written by Progressive covering commercial hauling also covered this accident. C) Since both Progressive and Farm Bureau had denied coverage the uninsured motorist provisions of the policies written by Omaha and Cameron had been triggered. "In the event payments are made by Omaha Indemnity and/or Cameron Mutual, they are entitled to Subrogation against Progressive Casualty and Farm Bureau." D) Neither Fred Weber, Inc., or Bloomsdale Excavating had any liability. E) If coverage is accepted by Progressive or Farm Bureau then Omaha and Cameron would no longer be liable. In addition, the trial court noted that Abernathy and Schreiner "are not entitled to a double recovery and that the defendants/claimants may recover from the uninsured motorist carriers only (after which the carriers may subrogate) or from one or both of the liability carriers only (in which case the uninsured motorist carriers would no longer be liable)." From this judgment Farm Bureau, Progressive, Omaha and Cameron appeal.

Because the actions of the trial court were taken as a result of summary judgment requests, the same standard of review is applicable to all of the appeals taken. Summary judgment is appropriate when the documents before the trial court, including pleadings, depositions, admissions and exhibits show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Signature Pool v. City of Manchester, 743 S.W.2d 538 (Mo.App.1987).

I.

Farm Bureau appeals from the trial court's determination that its "Farm Use" exclusion is ambiguous and that Farm Bureau is liable for at least some portion of the damages from the accident. It argues that the phrase "the insured vehicle is to be used exclusively for the farm use of the named insured only," coupled with the phrase "Any use of the vehicle for hire ... voids the policy" clearly excludes simultaneous use from coverage. First we note that exclusionary clauses in insurance contracts are to be strictly construed against the author. If they are ambiguous, we are compelled to adopt a construction favorable to the insured. McRaven v. F-Stop Photo Labs, Inc., 660 S.W.2d 459, 462 (Mo.App.1983). "The language of a contract is ambiguous when there is doubt or uncertainty as to its meaning and it is fairly susceptible of two interpretations." Nixon v. Life Investors Ins. Co. of America, 675 S.W.2d 676, 679 (Mo.App.1984). In addition, the burden of proof is on the insurer to prove that the exclusion applies. American Family Mutual Ins. Co. v. Brown, 657 S.W.2d 273, 275 (Mo.App.1983).

Our review of the evidence presented convinces us that the exclusion is not sufficiently clear regarding prohibited activities to justify its enforcement. The confusion surrounding this exclusion is vividly illustrated in the deposition of Farm Bureau's underwriter, Claudia Goodin:

Q. Let me ask it this way: let's say that the guy has gravel on his own farm and he fills up his own dump truck and he is intentionally going to take it down the road and sell the gravel to his neighbor. Then driving from the...